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Decline in textiles & apparel exports to US

May '09
Not only have India's exports to its single largest destination USA fallen by 11.5% in the five-month period since last October; in fact, India fared comparatively worse than a set of competing countries, FICCI analysis revealed. “The sharp decline in our exports to US that accounts for 13% of our global exports, is a matter of deep concern.

This is more so as FICCI analysis shows that India's exports have declined more sharply than those of China, Korea and Brazil, while US-bound exports from Ireland, Indonesia and Vietnam actually grew by 3-12 per cent”, FICCI President Mr Harsh Pati Singhania observed. In Jan-Feb'09 a steep decline of 23% occurred in exports from India to US which recorded a modest decrease of 3.6% in Q-4 of 2008 after rising by about 14% in Q-3. For the entire five-month period ending February'09, India's performance however was better than Malaysia, Taiwan, Thailand, Russia and Singapore, according to FICCI.

The decline in India's exports to USA for major items like gems & jewellery, textiles & apparel, pharmaceuticals, vehicles and auto parts has been moderated to some extent by rising exports of chemicals, machinery, iron & steel, instruments, leather, plastics, agro-items and processed food each of which increased by 8 to19 per cent. Interestingly, our exports to USA have gone up for at least 6 important product groups where American total imports actually shrank since October'08.

For example, machinery & parts witnessed a 19% rise from $993 million to $1.2 billion (against 15.4% contraction in US global imports of this item) while chemicals recorded an increase of over 14% from $851 million to $974 million (against 1.5% decrease in US global imports of this product). Exports of iron & steel from India grew by 14% coinciding with similar growth in US total imports of this product group.

FICCI pointed out that products experiencing positive growth have partially offset the sharp decline in several items of India's exports to USA, such as gems & jewellery (35% fall), textiles & apparel (6.5%), pharmaceuticals (37%), vehicles & auto parts (17%), non-ferrous metals (6.4%), marine products (9%), mineral fuels (85%), stone & articles (29%) and miscellaneous manufactured articles (12%).

Since these products with significant negative growth cumulatively account for 57% of India's export basket to USA, overall exports from India to the American market dropped by 11.5% in Oct'08-Feb'09. In fact, in the absence of improved export performance of items like machinery, chemicals, iron & steel and few others, the fall would have been much greater.

For two principal exports from India that have fallen since last October, FICCI observed that select competitor countries have in fact registered positive growth in the same period. For instance, in textiles and apparel Bangladesh and Vietnam have expanded their exports by 18 and 9 per cent respectively while China, Indonesia and Pakistan too achieved marginal rise in contrast to 6.5% fall in the case of India.

Similarly in pharmaceuticals, exports from China, Israel and South Korea moved up by 27 to 41 per cent as compared with significant decline of 37% in India's exports to USA. “This is a source of worry and the Government has to look into specific measures to reverse such trend”, added Mr Singhania.

Graphical Presentation:

Federation of Indian Chambers of Commerce and Industry

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